THE

LIBERTARIAN

ENTERPRISE

The Saga of the Moose's Tooth

Eight Western states (but not California) outperformed the rest of the
country in economic growth during much of the 1990s -- while Hawaii
and Alaska suffered the most pathetic growth rates, according to a
Commerce Department report released June 4 in Washington.

The report's authors blamed California's sub-par economic performance
on slowdowns among defense contractors. In attempting to explain
Hawaii's worst-in-the-nation economic performance during the period
(the Aloha state's economy actually shrank by 0.3 percent),
"Government analysts said that the state ... was hard hit by the
1997-98 Asian currency crisis, which cut into the state's tourism
business," reports AP economics writer Martin Crutsinger.

What "government analysts" apparently failed to note or mention is
that, among the 50 American commonwealths, Hawaii is the most nearly
perfect model of a high-tax, single-party welfare state, where
Democratic Party pork and make-work public sector jobs proliferate
unchecked by any substantial conservative or libertarian opposition,
and where the now-standard run of "environmental" restrictions on
business activity not only proliferate like Kudzu (you can't even put
up a billboard anywhere in Hawaii), but are then geometrically
multiplied by restrictions on virtually any productive land use which
might somehow offend aboriginal sensibilities.

That traditionally low-tax, less-government havens like Idaho, New
Mexico, Utah, and New Hampshire (the last proving the trend is not
merely regional) would also lead the nation in job and profit growth
is no surprise. At first glance, however, this would appear to leave
Alaska as the largest remaining mystery in this week's report.

Why would the once laissez-faire northern empire place next-to-last in
growth with an average increase of just 0.5 percent during the
eight-year period, faring even worse than Sen. Byrd's barefoot pork
palace of West Virginia, which weighed in at a predictably anemic 2.4
percent?

The answer, of course, is that things have changed in Alaska. Matt
Jones of the Bear Tooth Theater Pub explains there was no cap on
microbrewery production or the number of locations he and partner Rod
Hancock could open when they launched their popular, upscale Anchorage
venture in 1996.

But then their competitors at Alaska's Cabaret, Hotel, and Restaurant
Retailers Association got busy, dispatching highly-paid lobbyists to
the state Legislature to warn that "If we don't watch out, Alaska will
have a brew pub on every corner, like they do down in Seattle!"

Oh, the humanity.

"We were never contacted or asked about it," the microbrewer told me
over lunch at his spiffy new joint last month. "Then suddenly we got
this letter saying we were grandfathered in, but we can never open
another restaurant, when it was written right there in our business
plan that we'd always figured on expanding and opening subsequent
locations."

In 1999, Jones and Hancock and the owners of Anchorage's competing
Glacier Brew House were "allowed" to open second locations (Jones and
Hancock started down the street at The Moose's Tooth Saloon), but only
in exchange for agreeing to purchase otherwise unnecessary $150,000
full-liquor licenses for each location, and accepting production caps
on their microbreweries of 4,800 kegs per year.

What does this mean to Jones and Hancock's fast-growing business,
which has already created 200 new Alaska jobs?

"Due to the level playing field there, Oregon is now known as the
mecca of handbrewed beer, because people can live and die by their
wits," Jones explains. "If you're a beer connoisseur you visit
Portland. But now no will will ever come to Anchorage for that. The
state is shooting itself in the foot. We just had a meeting, and it
looks like we're going to have to farm out the brewing of our extra
production" (to meet current-year customer demand) "to Oregon. So
those jobs and that tax revenue will all go to Oregon. What we'll have
to do is pace our production here so as not to reach 75,000 gallons
till December so our five brewery workers don't have to get laid off
in October.

"We put together a great team of brewers, and they were real excited
about the chance to grow, here. But now they're on pins and needles,
wondering if they're even going to have their jobs."

Oregon's ranking in this week's Commerce Department survey of economic
growth? Third best in the nation, at 6.8 percent, interestingly
enough.

The real correlation with economic growth or slowdown would appear to
have far less to do with defense contracts -- or any Asian currency
crisis -- than it does with whether a state's lawmakers strive to keep
taxes low and stay the employment-strangling hand of the "regulatory"
racketeers. Once a laissez-faire paradise for the self-sufficient,
Alaska now seems to have instead fallen into the hands of the
protection rackets and their professional legislative wheel-greasers.

Too bad. Pretty country up there ... if only they'd let a guy make a
living.